Thank you very much, Mr. President.
Good afternoon, everybody.
Ladies and gentlemen members of the Standing Committee on International Trade, thank you.
I would like to thank you, Mr. President, and members for their kind invitation to speak on the Chilean perspective with regard to the Pacific Alliance, consisting today of four members, Chile, Colombia, Peru, and Mexico; two observer candidates, Costa Rica and Panama; and six observers. In this last category we find Canada, Australia, Guatemala, Japan, New Zealand, and Spain.
Chile, as all of you know, currently occupies the pro tempore presidency of the alliance, which has been created to achieve, in a participatory way and by consensus, an area of integration aimed at developing progressive steps toward the free circulation of goods, services, capital, and people. This big undertaking also aims to prompt the greater growth, development, and competitiveness of our economies, with special emphasis on the Asia-Pacific region.
Since its birth, coming from an initiative of the former President of Peru, Alan Garcia, in April 2011, the Pacific Alliance has developed an intense agenda of meetings at the level of heads of state, ministers, and deputy ministers of foreign affairs and trade. As well, it has constituted a cabinet and nine technical working groups: movement of businesspeople and facilitation of migratory movements, coordinated by Mexico; trade and integration, including trade facilitation measures, coordinated by Chile; trade in services and capital movement, coordinated by Colombia; cooperation, coordinated by Peru; institutional issues, coordinated by Peru; communication strategy, coordinated by Mexico; government procurement, coordinated by Chile; intellectual property, coordinated by Colombia; and regulatory improvement, coordinated by Mexico. These last two groups, intellectual property and regulatory improvement, are only having exploratory talks with no mandate for negotiation.
These working groups have been doing their job in a very disciplined manner; their results are destined to move forward in a series of definitive high-level commitments, among them tariff liberalization, a goal aimed to be achieved for 90% of goods by March 31 this year, within 10 more days.
Likewise, the alliance is engaged in concluding negotiations in several areas this year, deepening the existing bilateral free trade agreements among the four members. These areas include: market access for trade in goods; rules of origin; phytosanitary and sanitary measures; technical obstacles to commerce; facilitation of trade; customs cooperation; services, including financial products; marine transportation; telecommunications; air services; professional services; investments; and public procurement.
At the same time, we have established a mechanism of cooperation between trade promotion agencies to increase the presence of goods and services from members through institutional cooperation in international markets. For instance we are thinking of joint trade offices. We also agreed to attract investment and trade among the members during a macro business round to be held in Cali, Colombia, next June.
In August 2012 the Pacific Alliance Business Council was created to promote initiatives within member countries and the business community in general, as well as to develop recommendations and suggestions to governments to improve this integration process. Their members will suggest joint actions to access foreign markets, mainly in the Asia-Pacific region.
As you can see, ladies and gentlemen, this is an ambitious project that Chile decided to associate with enthusiastically from the beginning. Why? Because we have verified, essential common elements that link us with the other associates or like-minded countries who share fundamental values of democracy, respect for human rights, and all fundamental liberties. There is also our effective commitment to free trade as an instrument destined to promote the prosperity of our people. Another consideration was the positive behaviour observed in our economies in the last years in terms of political stability, clear rules, and responsible management. Finally, there's the interest in gathering our efforts to face the challenges presented by the international economy and the boom of the Asia-Pacific region as a zone of greater dynamism in the world.
We are aware, Mr. Chairman, of the great dose of strong political will required for this project to function. We know this will require a substantial amount of flexibility and mutual concessions. But our governments have resolved to undertake this road with energy and determination, with the dynamic working plan that seeks to reach agreements gradually in all the areas, about which we are definitely optimistic.
We are also conscious about the interest generated by the Pacific Alliance in the international community, which is explained by the requests received from several countries to participate at different levels. In this sense we took note of the desire expressed by Canada, which became concrete in the summit in Paranal, Chile, in 2012, to which Minister John Baird was invited.
My country has developed an encouraging role in the Canadian accession process and we observe with satisfaction that the Canadian decision is being materialized at an internal level, with examples such as the study initiated today by this committee.
With the purpose of making a further contribution to this exercise, allow me to present some pictures and figures that will illustrate better what is the starting point of the Pacific Alliance and its enormous potential that is committed to develop ahead.
First, you will see a comparison between the GDP of the alliance and the median GDP of Latin America. We have 35.8% of the population of Latin America. We are now the second largest economy of Latin America and the Caribbean, the ninth in the world economy, and we have 2.9% of the world's trade.
Trade openness is 60% of our GDP. In the case of Brazil it is 24%, and in the case of Latin America it is 51.3%.
In this next slide you will see the size of the market. We have a population of 207 million, which represents 34% of Latin America's GDP, and 50% of Latin American exports.
You each have documents that compare Chile and the Pacific Alliance.
As well, you will note the comparative GDP growth of the Pacific Alliance, which is very interesting as you can see that the forecast for this year places the world at 3.6%, and Latin America and the Caribbean at 3.9%, Brazil at 4%, Chile at 4.4%, Colombia at 4.4%, Mexico at 3.5%, and Peru at 5.8%.
You can also see that we are of course very open trading countries. Chile is trading with 72% coverage of the world, Peru 54%, Mexico 65%, and Colombia 39%. That means there is a big net of free trade agreements.
This next slide illustrates a few of the challenges that are affecting us. As you can see, we have some recent free trade agreements, between Chile and Colombia, and Colombia and Peru, which have big coverage. The older agreements are less open, so we will have to face challenges to change that situation.
Here you will note the relationship between the Pacific Alliance and world trade. Chile has $160 billion; Peru $83 billion; Colombia $100.6 billion; and Mexico represents trade of $700.4 billion.
On this next slide there is a sort of formal problem with it, so I would like to pass over it. We are going to replace it afterwards.
Here you have investments, and in investments of course, as you know, Canada is very strong in Latin America, and you can see that in Latin America it has concentrated a huge amount of investments. In Latin America last year Brazil was the number one, and we achieved $26 billion in investment. Then Mexico, Colombia, Argentina, and Peru. That means the region is becoming a recipient of enormous amounts of investment, and with the projects that are still under study, I think this amount of investment, especially Canadian investment, is going to increase in the next few years.
Here in Latin America we are starting to be investors in our own region, as you can see. Chile has $55.6 billion U.S. that's invested in the world, but a part of it is in the Pacific Alliance. Peru is at $1.2 billion, Colombia at $31.2 billion, and Mexico $98.5 billion. That's a big space to cover because our investments are not so huge yet in the region, so I think we can do much better with the alliance.
This next slide is very interesting because it shows you the attractive business environments and the position of the four countries of the alliance that are very well positioned if you compare the world and other countries, even very important countries.
Allow me, after this general introduction, to show you a couple of slides about Chile and the Pacific Alliance. This is our bilateral trade. Chile's exports to it were $4.063 billion, mostly non-mining and chemical goods. Imports were $6.875 billion U.S. This is the composition of our trade with the Pacific Alliance. As you can see, the mining has been decreasing very dramatically in the last year, probably because nowadays we were selling our mining products much more to Asia and North America. On the contrary, the other products are increasing, so there is much work to do in that sense as well.
Then there are some figures about Canada and the Pacific Alliance. The first one relates to your exports to and imports from Latin America and the Pacific Alliance. This shows you that the Pacific Alliance countries, as partners for Canada in the region, are probably the most important, or the ones who have the main part. But, of course, there are many things to do if you think that Latin America only accounts for 2.8% of the Canada's exports and 9.2% of its imports. Of course, you import much more from our region than you sell to it, so I think the alliance could be a very good opportunity to balance the situation in the next years.
Then for investment—
